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A rally

01 November 2004 Angelo Coppola

The Nedcor Economic Unit reports that against the euro, the domestic unit firmed to R7,81 from R7,83, and to R11,24 from R11,35 against the pound.

The domestic bond market also closed slightly higher, helped by the firmer rand and good inflation figures.

Yields on the longer-dated R153 2010 and the R194 2008 were firmer at 8,52% and 8,22% respectively from 8,54% and 8,26% a week ago.

Money market rates were mixed. The yields on the 3- and 6-month NCDs remained unchanged at 7,55% and 7,50% respectively, while those on the 9- and 12-month NCDs rose to 7,75% and 7,70% respectively from 7,50% and 7,65%. The yield on the 3-month Jibar eased to 7,45% from 7,471%.

Rand-sensitive sectors weighed on general equities, with the FTSE/JSE all-share index managing a small gain of 0,1% or 8,2 points during the week to close at 11 655,3.

Resources lost 3,3% or 356,2 points to 10 524,9, while gold stocks declined by 5,6% to 1933,7 from 2 049,5. Industrials gained 2,1% to close at 10 305,4, while financials were up at 10 305,4 from 10 090,9, a gain of 2,1%.

All measures of inflation remained relatively benign in September. CPIX inflation – the Reserve Bank’s benchmark for inflation, which excludes the effect of interest rate costs – was steady at 3,7% y-o-y (0,3% m-o-m), while overall CPI rose to 1,3% y-o-y from 1,0% y-o-y in August.

Subdued increases in housing costs and food prices – which account for about 37,2% of CPIX – coupled with declines in medical care and health expenses as well as furniture and equipment limited the impact of a 1,7% rise in transport costs, which was due to the 23c/litre increase in the petrol price.

Producer inflation edged higher in September, but remained low at only 1,4% y-o-y (down 0,9% m-o-m) from 1,1% in August. The domestic component of ppi rose by 2,4% y-o-y (down 1,4% m-o-m), while the imported category declined by 7,7% y-o-y (up 0,8% m-o-m).

Quick Polls

QUESTION

As National Treasury mulls a two-bucket retirement system, mandatory contributions and preservation, regulation 28 is being amended to allow up to 40% of retirement fund assets to be invested in SA-based infrastructure… Which of the following retirement fund ‘tweaks’ would you consider most beneficial to your clients?

ANSWER

Give fund members emergency access to retirement savings
Let fund members invest 40% in infrastructure
Let fund members invest 40% offshore
Mandatory preservation when resigning from a fund
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